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CW Bancorp Reports Q3 2022 EPS of $1.33 up 35% and ROTE of 27.8% up 39%

IRVINE, Calif., October 27, 2022--(BUSINESS WIRE)--CW Bancorp (OTCQX: CWBK), the parent company ("the Company") of CommerceWest Bank (the "Bank") reported consolidated net income for the third quarter of 2022 of $4,595,000 or $1.33 a share as compared to $3,576,000 or $0.99 a share for the third quarter of 2021, an EPS increase of 35% and net income for the nine months ended September 30, 2022 of $12,839,000 or $3.68 a share as compared to $10,204,000 or $2.80 a share for the nine months ended September 30, 2021, an EPS increase of 31%.

Key Financial Results for the three months ended September 30, 2022:

  • EPS of $1.33 up 35%

  • Net income growth of 28%

  • ROTE of 27.8% up 39%

  • ROA of 1.57% up 41%

  • Net interest income up 43%

  • Net interest margin up 58%

  • Efficiency ratio of 40.63%

  • ALLL to total loans ratio (net of PPP loans) of 1.34%

  • 51 quarters of consecutive profits

Key Financial Results for the nine months ended September 30, 2022:

  • EPS of $3.68 up 31%

  • Net income growth of 26%

  • ROTE of 25.54% up 28%

  • ROA of 1.41% up 24%

  • Net interest income up 33%

  • Net interest margin up 32%

  • Efficiency ratio of 41.14%

  • Noninterest-bearing deposits as percent of total deposits at 62%

Mr. Ivo Tjan, Chairman and CEO, commented, "The Company has again delivered double digit growth in earnings per share, net income, net interest margin and return on tangible equity for both the quarter and nine months ended September 30, 2022." Mr. Tjan continued, "Although it’s a challenging operating environment, our Company is well positioned, with a fortress balance sheet to service our clients during these turbulent times."

Total assets decreased $183 million as of September 30, 2022, a decrease of 14% as compared to the same period one year ago. Total loans increased $182 million as of September 30, 2022, an increase of 30% over the prior year. Total loans net of PPP loans increased $289 million as of September 30, 2022, an increase of 59%. Cash and due from banks decreased $392 million or 73% from the prior year with the deployment of funds into loans and investment securities. Total investment securities increased $19 million, an increase of 12% from the prior year.

Total deposits decreased $197 million as of September 30, 2022, a decrease of 16% from September 30, 2021. Non-interest-bearing deposits decreased $33 million as of September 30, 2022, a decrease of 5% from the prior year. Interest bearing deposits decreased $164 million as of September 30, 2022, a decrease of 30% from the prior period. Clients are utilizing their available liquidity rather than borrowing against lines of credit due to the increase in interest rates.

Interest income was $10,661,000 for the three months ended September 30, 2022 as compared to $7,379,000 for the three months ended in September 30, 2021, an increase of 44%. Interest expense was $856,000 for the three months ended September 30, 2022 as compared to $525,000 for the three months ended in September 30, 2021, an increase of 63%. Interest expense was up for the quarter due to the rising cost of deposits as well as the cost of subordinated debt. Interest income was $29,552,000 for the nine months ended September 30, 2022 as compared to $22,096,000 for the nine months ended in September 30, 2021, an increase of 34%. Interest expense was $2,120,000 for the nine months ended September 30, 2022 as compared to $1,480,000 for the nine months ended in September 30, 2021, an increase of 43%. The cost of the subordinated debt was the primary reason for the increase in interest expense year over year. The Company was able to offset some of this increase, reducing the cost of deposits during the nine months ended September.

Net interest income for the three months ended September 30, 2022 was $9,805,000 compared to $6,854,000 for the three months ended September 30, 2021, an increase of 43%. The net interest margin increased for the three months ended September 30, 2022. It increased from 2.28% in 2021 to 3.61% in 2022, an increase of 58%. Net interest income for the nine months ended September 30, 2022 was $27,432,000 compared to $20,616,000 for the nine months ended September 30, 2021, an increase of 33%. The net interest margin increased for the nine months ended September 30, 2022. It increased from 2.43% in 2021 to 3.21% in 2022, an increase of 32%.

Provision for loan losses for the three months ended September 30, 2022 was $300,000 as compared to zero for the three months ended September 30, 2021. Provision for loan losses for the nine months ended September 30, 2022 was $800,000 as compared to zero for the nine months ended September 30, 2021. The allowance for loan losses to total loans ratio (net of PPP loans) decreased from 1.74% as of September 30, 2021 to 1.34% as of September 30, 2022.

Non-interest income for the three months ended September 30, 2022 was $1,565,000 compared to $1,490,000 for the same period last year, an increase of 5%. Non-interest income for the nine months ended September 30, 2022 was $4,473,000 compared to $3,880,000 for the same period last year, an increase of 15%.

Non-interest expense for the three months ended September 30, 2022 was $4,659,000 compared to $3,778,000 for the same period last year, an increase of 23%. Non-interest expense for the nine months ended September 30, 2022 was $13,249,000 compared to $10,988,000 for the same period last year, an increase of 21%.

The efficiency ratio for the three months ended September 30, 2022 was 40.63% compared to 44.91% in 2021, which represents a decrease of 10%. The efficiency ratio illustrates that for every dollar made for the three-month period ending September 30, 2022, it cost $0.4063 to make it, as compared to $0.4491 one year ago. The efficiency ratio for the nine months ended September 30, 2022 was 41.14% compared to 44.47% in 2021, which represents a decrease of 7%.

Capital ratio for the Bank remain above the level required for a "well capitalized" institution as designated by regulatory agencies. As of September 30, 2022, the tier 1 leverage ratio was 10.45%, the common equity tier 1 capital ratio was 15.80%, the tier 1 risk-based capital ratio was 15.80% and the total risk-based capital ratio was 17.05%.

CommerceWest Bank is determined to redefine banking for small and medium sized businesses by delivering on customized products and services. Founded in 2001 and headquartered in Irvine, California, the Bank serves businesses throughout the state of California with our digital banking platform. By employing a strategically selected team of experienced professionals, we will provide flexibility, create a complete, safe and sound banking experience for each client. We provide a wide range of commercial banking services, including remote deposit solution, NetBanker online banking, mobile banking, lines of credit, M&A / working capital loans, commercial real estate loans, SBA loans and treasury management services.

Mission Statement: CommerceWest Bank will create a complete banking experience for each client, catering to businesses and their specific banking needs, while accommodating our clients and providing them high-quality, low stress and personally tailored banking and financial services.

Please visit www.cwbk.com to learn more about the bank. "BANK ON THE DIFFERENCE"

Statements concerning future performance, developments or events, expectations for growth and income forecasts, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, loan production, balance sheet management, expanded net interest margin, the ability to control costs and expenses, interest rate changes, financial policies of the United States government and general economic conditions. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any forward-looking statements contained in this release to reflect future events or developments.

THIRD QUARTER REPORT - September 30, 2022 (Unaudited)

CW BANCORP

%

CONSOLIDATED BALANCE SHEET

Increase

(dollars in thousands)

Sept 30, 2022

Sept 30, 2021

(Decrease)

ASSETS

Cash and due from banks

$

147,876

$

539,932

-73

%

Securities available for sale

124,758

131,085

-5

%

Securities held-to-maturity

51,652

26,272

97

%

Loans (PPP loans $4,981 and $111,389 at 2022 and 2021, respectively)

786,384

603,987

30

%

Less allowance for loan losses

(10,491

)

(9,185

)

14

%

Loans, net

775,893

594,802

30

%

Bank premises and equipment, net

5,255

5,941

-12

%

Other assets

34,442

25,260

36

%

Total assets

$

1,139,876

$

1,323,292

-14

%

LIABILITIES AND STOCKHOLDERS' EQUITY

Non-interest bearing deposits

$

624,102

$

656,849

-5

%

Interest bearing deposits

384,256

548,123

-30

%

Total deposits

1,008,358

1,204,972

-16

%

Subordinated debenture

50,000

32,500

54

%

Other liabilities

16,509

12,258

35

%

1,074,867

1,249,730

-14

%

Stockholders' equity

65,009

73,562

-12

%

Total liabilities and stockholders' equity

$

1,139,876

$

1,323,292

-14

%

Shares outstanding at end of period

3,352,358

3,497,111

Book value per share

$

23.52

$

20.40

Total loans to total deposits

77.99

%

50.12

%

ALLL to total loans (net of PPP loans)

1.34

%

1.74

%

Nonperforming assets (non-accrual loans & OREO)

$

-

$

-

COMMERCEWEST BANK CAPITAL RATIOS:

Tier 1 leverage ratio

10.45

%

7.57

%

Common equity tier 1 capital ratio

15.80

%

15.38

%

Tier 1 risk-based capital ratio

15.80

%

15.38

%

Total risk-based capital ratio

17.05

%

16.63

%

CW BANCORP

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

Three Months Ended

Increase

For the Nine Months Ended

Increase

(dollars in thousands except share and per share data)

Sept 30, 2022

Sept 30, 2021

(Decrease)

Sept 30, 2022

Sept 30, 2021

(Decrease)

INTEREST INCOME

Loans

$

8,897

$

6,444

38

%

$

25,023

$

19,631

27

%

Investments

1,083

613

77

%

3,170

1,573

102

%

Fed funds sold and other

681

322

111

%

1,359

892

52

%

Total interest income

10,661

7,379

44

%

29,552

22,096

34

%

INTEREST EXPENSE

Deposits

383

224

71

%

708

806

-12

%

Subordinated debenture

469

301

56

%

1,406

674

109

%

Other borrowings

4

-

-

6

-

-

Total interest expense

856

525

63

%

2,120

1,480

43

%

NET INTEREST INCOME BEFORE LOAN LOSS PROVISION

9,805

6,854

43

%

27,432

20,616

33

%

PROVISION FOR LOAN LOSSES

300

-

-

800

-

-

Non-interest income:

NET INTEREST INCOME AFTER LOAN LOSS PROVISION

9,505

6,854

39

%

26,632

20,616

29

%

NON-INTEREST INCOME

Service Charges and Fees on Deposits

1,197

1,303

-8

%

3,338

3,276

2

%

Gain on Sale of Loans

-

-

-

-

(4

)

-100

%

Other Fees

368

187

97

%

1,135

608

87

%

NON-INTEREST EXPENSE

4,659

3,778

23

%

13,249

10,988

21

%

EARNINGS BEFORE INCOME TAXES

6,411

4,566

40

%

17,856

13,508

32

%

INCOME TAXES

1,816

990

83

%

5,017

3,304

52

%

NET INCOME

$

4,595

$

3,576

28

%

$

12,839

$

10,204

26

%

Basic earnings per share

$

1.37

$

1.02

34

%

$

3.78

$

2.89

31

%

Diluted earnings per share

$

1.33

$

0.99

35

%

$

3.68

$

2.80

31

%

Return on Assets

1.57

%

1.12

%

41

%

1.41

%

1.14

%

24

%

Return on Equity

26.55

%

19.20

%

38

%

24.43

%

19.10

%

28

%

Return on Tangible Equity

27.79

%

20.03

%

39

%

25.54

%

19.96

%

28

%

Efficiency Ratio

40.63

%

44.91

%

-10

%

41.14

%

44.47

%

-7

%

CW BANCORP

CONSOLIDATED AVERAGE BALANCE SHEET and YIELD ANALYSIS

Three Months Ended Sept 30,

2022

2021

Average
Balance

Interest
Income /
Expense

Yield /
Cost

Average
Balance

Interest
Income /
Expense

Yield /
Cost

(dollars in thousands)

INTEREST EARNING ASSETS

Int Bearing Due from Banks & FFS

$

98,275

$

550

2.22

%

$

463,009

$

274

0.23

%

Investment Securities (1)

182,218

1,180

2.57

%

110,904

687

2.46

%

Loans

801,866

8,897

4.40

%

628,060

6,444

4.07

%

FHLB & Other Stocks

6,504

131

7.99

%

4,150

48

4.59

%

Total interest-earning assets

1,088,863

10,758

3.92

%

1,206,123

7,453

2.45

%

Noninterest-earning assets

69,884

62,061

Total assets

$

1,158,747

$

1,268,184

INTEREST EARNING LIABILITIES

Interest Bearing Deposits

$

394,515

$

383

0.39

%

517,281

224

0.17

%

Other Borrowings

489

4

3.25

%

-

-

0.00

%

Subordinated Debenture

50,000

469

3.75

%

32,500

301

3.70

%

Total interest-earning liabilities

445,004

856

0.76

%

549,781

525

0.38

%

Noninterest-earning liabilities

Demand Deposits

631,554

628,001

Other Liabilities

13,531

16,501

Shareholders' Equity

68,658

73,901

Total liabilities and shareholder's equity

$

1,158,747

$

1,268,184

Net Interest Spread

$

9,902

3.16

%

$

6,928

2.07

%

Net Interest Margin

3.61

%

2.28

%

Total Deposits

$

1,026,069

$

383

0.15

%

$

1,145,282

$

224

0.08

%

Total Funding Costs

$

1,076,558

$

856

0.32

%

$

1,177,782

$

525

0.18

%

(1) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate

CW BANCORP

CONSOLIDATED AVERAGE BALANCE SHEET and YIELD ANALYSIS

Nine Months Ended Sept 30,

2022

2021

Average
Balance

Interest
Income /
Expense

Yield /
Cost

Average
Balance

Interest
Income /
Expense

Yield /
Cost

(dollars in thousands)

INTEREST EARNING ASSETS

Int Bearing Due from Banks & FFS

$

173,418

$

1,104

0.85

%

$

399,216

$

764

0.26

%

Investment Securities (1)

180,954

3,469

2.56

%

90,804

1,783

2.63

%

Loans

794,146

25,023

4.21

%

650,586

19,631

4.03

%

FHLB & Other Stocks

5,645

255

6.04

%

3,622

128

4.72

%

Total interest-earning assets

1,154,163

29,851

3.46

%

1,144,228

22,306

2.61

%

Noninterest-earning assets

65,572

55,666

Total assets

$

1,219,735

$

1,199,894

INTEREST EARNING LIABILITIES

Interest Bearing Deposits

$

434,484

$

708

0.22

%

$

466,254

$

806

0.23

%

Other Borrowings

612

6

1.31

%

14

-

0.00

%

Subordinated Debenture

50,000

1,406

3.75

%

24,074

674

3.73

%

Total interest-earning liabilities

485,096

2,120

0.58

%

490,342

1,480

0.40

%

Noninterest-earning liabilities

Demand Deposits

651,257

627,543

Other Liabilities

13,114

10,593

Shareholders' Equity

70,268

71,416

Total liabilities and shareholder's equity

$

1,219,735

$

1,199,894

Net Interest Spread

$

27,731

2.88

%

$

20,826

2.21

%

Net Interest Margin

3.21

%

2.43

%

Total Deposits

$

1,085,741

$

708

0.09

%

$

1,093,797

$

806

0.10

%

Total Funding Costs

$

1,136,353

$

2,120

0.25

%

$

1,117,885

$

1,480

0.18

%

(1) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate

View source version on businesswire.com: https://www.businesswire.com/news/home/20221027005271/en/

Contacts

Bancorp Contact
Mr. Ivo A. Tjan, CEO
Ms. Leeann Cochran, CFO
Telephone: (866) 521-CWBK
E-mail: InvestorRelations@cwbk.com
Website: www.cwbk.com
"Bank on the Difference"